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Asia Regional Planning Meeting-Agricultural Markets and Risks in Asia:Challenges to Manage both for Dryland Cereals & Pulses by Dr Ranjit Kumar

  1. Agricultural Markets and Risks in Asia: Challenges to Manage both for Dryland Cereals & Pulses KV Raju, Ranjit Kumar, D Kumara Charyulu, V Surjit Policy and Impact Unit Research Program- Asia Region Asia Regional Planning Meeting 4-5th May, 2016 CF Bentley Conference Room, ICRISAT, Patancheru
  2. Context Challenge: Consistently improving farm income for the smallholders growing dryland cereals & pulses • In Asia, steady population growth and rising per capita incomes  more demand for protein, less carb… • Besides technologies, markets and other risks factors drive dryland cereals and pulses. • In real terms, prices for all food items are expected to decline in the long run, … (intensification high agri- output) (Hazell and Wood, 2007; OECD-FAO, 2015) ISSUES:  Declining demand for dryland cereals crops loosing grounds…  Demand for pulses rising, but acreage allocation not encouraging…  Imperfect market  smallholders not getting benefits  Huge production, market and price risk for SMFs  Volatility of farm incomes for DC & GL farmers on the rise & profit margin shrinking WHY
  3. Sorghum • Production in Asia declining by 2.26% annually. Asia (TE 2014-15) Total area: 7.8 mha Total prodn: 9.6 mt 0 100 200 300 400 Index of Sorghum Area (1995 area =100) Asia Bangladesh China India Myanmar Pakistan 0 50 100 150 200 250 300 350 400 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Index of Millets Area (1995 area = 100) Asia Bangladesh China India Myanmar Nepal Pakistan Millets Asia (TE 2014-15) Total area: 11.0 mha Total prodn: 13.9 mt • India  80% of total millets prodn in Asia. • Total production stagnant
  4. Pulses 0 50 100 150 200 250 300 Index of Area under Pulses (1995=100) Asia Bangladesh China India Myanmar Nepal Pakistan Sri Lanka Area: TE 2014/15 Asia- 41.2 mha India- 28.3 mha Myanmar- 3.8 mha China- 2.9 mha Production in Asia: TE 2014/15 41.2 million tonnes 0 20 40 60 80 100 120 140 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 AsiaIndex(Prodn1995=100) Share in total pulses production in Asia Bangladesh China India Myanmar Pakistan Nepal Asia- Index • Myanmar emerged as 2nd largest pulses producer in Asia. • Pulses prodn ↑ by 2.5% p.a. in Asia (IND, MYN, NPL)
  5. Sorghum Millets Creating new demand ??? e.g. multigrain products, nutri-cereals 0 50 100 150 200 250 2005 2006 2007 2008 2009 2010 2011 2012 2013 INDIA Net export ('000 t) -400 -200 0 200 2005 2006 2007 2008 2009 2010 2011 2012 2013 CHINA Millet Sorghum -1180.7 Domestic demand Export demand Pulses Meeting growing demands -4000 -3000 -2000 -1000 0 1000 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 Net export of pulses ('000 t) China Bangladesh India Myanmar Pakistan  Pulses imports growing, despite good production.  Area expansion is limited For Myanmar, huge dependence on export to single country big risk
  6. CRP-PIM Window 1-2 activity Cluster 3.3: Interventions to Improve Value Chains Activity title: Measuring Post-Harvest Losses of Select Pulses in South Asia and Options For Remediation Maharashtra Andhra Pradesh Pigeon pea (PP) Chick pea (CP) 2 districts 2 districts Villages – 16 PP farmers – 250 CP farmers - 250 Traders - 20 Dal mills - 5 Warehouses – 10 Wholesalers - 10 Retailers - 20 APMC mandi - 4 • Understanding pulses value chain • Various constraints and risks faced by the farmers • Policy and institutional gaps • Options for interventions and feedback for innovations WHAT
  7. Production risk Weather- less/more rain, untimely rain Pests & disease- input dealers driven solutions?? Technology- knowledge gap ??? Input market- quality ??? Political measures- land-based benefit schemes (large section out) 0 20 40 60 80 100 Prakasham Anantpur Mahbubnagar Yield instability, % (1993-2004) Sorghum P Millet Maize F Millet CP PP Cotton Source: Kumara (2007) Area allocation to a crop depends more on market signal (demand/price), than the technology alone. 26 23 29 24 70 55 80 61 66 62 59 49 55 60 29 45 20 38 29 36 15 28 17 15 1 0 1 5 2 0 100 TE 2001 TE 2010 TE 2001 TE 2010 TE 2001 TE 2010 TE 2001 TE 2010 TE 2001 TE 2010 Chickpea Pigeonpea Blackgram Greengram Lentil %age of pulses growing districts by crop yield in India >1 t/ha 0.5 to 1 t/ha <0.5 t/ha Yield of all pulse crops <1 t/ha in majority of pulses growing districts. WHAT
  8. Who is driving pulses value chain? Farmers Retailers Commission agents Fertilizer Seed Irrigation Rainfall Plant protection Harvesti ng Threshing Own/ Fellow farmers (80-90%) Mach. labour 100% Human Labour >95% Mandi (M/LF) Village traders/ Local market (SMF) Cold storage/ Warehouse (M/LF) Wholesalers (Grain/Processed) Big cities Import ConsumersFarmers’ group PRICE VARIETY WHAT Dal mills Flow of inputs Uncertainty in inputs Flow of commodity Flow of information Large traders (M/LF)
  9. Quality assessed by experience of traders Traders buy & sell produce, not Govt. agency APMC ensures timely payment to farmers by traders Markets Grading/ cleaning done by traders Mostly large/Med farmers keep stocks in warehouse SMF sell the produce directly after threshing  No objectivity in quality assessment  Farmers need to bring the produce to mandi  No agency to ensure MSP  SMF can’t keep small quantity in warehouse
  10. Price risk Price at Kurnool mandi 80% lower than that at Hyderabad B2B market 0 1000 2000 3000 4000 5000 6000 29-Feb 02-Mar 04-Mar 06-Mar 08-Mar 10-Mar 12-Mar 14-Mar 16-Mar 18-Mar 20-Mar 22-Mar 24-Mar 26-Mar 28-Mar 30-Mar 01-Apr 03-Apr 05-Apr 07-Apr 09-Apr 11-Apr 13-Apr 15-Apr 17-Apr 19-Apr 21-Apr 23-Apr 25-Apr 27-Apr 29-Apr (Rsper100kg) Chickpea price at Kurnool mandi Min Max MSP 0 2000 4000 6000 8000 10000 12000 29-Feb 02-Mar 04-Mar 06-Mar 08-Mar 10-Mar 12-Mar 14-Mar 16-Mar 18-Mar 20-Mar 22-Mar 24-Mar 26-Mar 28-Mar 30-Mar 01-Apr 03-Apr 05-Apr 07-Apr 09-Apr 11-Apr 13-Apr 15-Apr 17-Apr 19-Apr 21-Apr 23-Apr 25-Apr 27-Apr 29-Apr (Rsper100kg) Pigeonpea price Investigations needed ??? (Who, Where, Why, How) o Characteristics of farmers selling produce at lower than MSP o Small/marginal/large? o How many? o Any particular region/ random? o What %age of their produce fetched lower price? o Total produce or just small portion? o What was the reason? o Different variety? o Poor grain quality? o Uncleaned stock? o Poor bargaining power? o … How to control/ manage such shock? What is the mechanism to cover risk of value erosion?
  11. Risk Factors  Yield volatility: Improved variety playing important role. Farmers demand such variety which can perform much better than existing one in all conditions.  Price volatility: Consistent price policy, with enabling factors (markets, procurement)  Resource scarcity: water, fertilizers, plant protection chemicals  Policy changes: domestic as well as global  Demand volatility: Fast changing demand add additional risk of value erosion. Value chain actors to create demand.  Market acceptability of new product: e.g. Dal millers prefer Maruti (pigeon pea) and JG-11 (chick pea) due to easy removal of skin. Other variety fetch less price. HOW Volatility in agriculture is expected to increase - farm, market and price
  12. Happy farmers Improved technology (availability & access) 3 is Infrastructure, Institutions, Information Enabling policy environment (Insurance, price, etc.) Growing market demand Heavily subsidized rice and wheat (PDS) in SAT India eroded competitiveness of rainfed cereal crops and altered market price ratios. In Myanmar, domestic marketing reform with export liberalisation in 1987-88, led to area expansion under pulses by 247% in 1990s. Rural Godown Scheme (2010) backed with Pledge financing/WR helped chickpea growers in realising better price. HOW Markets & Risk- Way forward Short duration and wilt resistant cultivars, multi-crop seed-drillers & threshers, new age PP chemicals, etc.
  13. INDIA: The National Agriculture Market (NAM)/ E-Mandi HOW Ganguli (2012) Mobile assayer for quality check in Gulbarga pigeon pea market Challenges for SMF may continue??? Need: - decentralise market at farmers’ doorstep - standardized process - transparent pricing
  14. Crop Insurance HOW Comprehensive Crop Insurance scheme (CCIS) launched in 1985. National Agricultural Insurance Scheme (NAIS) launched in 1999. Prime Minister Crop Insurance Scheme (PMFBY) launched in 2016: Farmers pay only- 2% of the premium for Kharif FG/oilseed crops; 1.5% for rabi FG/oilseed crops 5% for horticultural & commercial crops Insurance cover for yield loss of standing crops, prevented sowing/ planting risk, post harvest losses and localised risks, including inundation. Challenges to implement: - Increasing coverage from current level of 23% (Compulsory with purchase of new seed??) - Assessing individual crop loss (Application of technology to assess the crop loss at plot level engaging local body) - Inclusion of marginal/ sharecroppers and non- loanee farmers (Digitization of plot and insurance based on plot-ID, rather than ownership) - Weather-based insurance (lack of technology & service provider)
  15. Markets & Risk Managing both 2. New market structure (e.g. mobile seasonal market, backed with warehousing) 4. Plot-wise crop insurance (using technology, apps, information flow, etc.) 3. Linking farmers to consumers (FPO/FIG- Processing & retailing, new consumers in rural area- PDS, Mid-Day) 1. Assured & transparent price (measured quality) Post-harvest technology: o Mid-size processing unit o Storage & Warehousing Production technology:  Varieties- for all weather  Plant protection  Small-size harvester Institutions:  Seed system  Farmers’ group  Contract farming NRM:  In situ rainwater harvesting  Residue management HOW
  16. Future Work Plan-  Policy framework and operational guidelines for formation & promotion of FPOs in Andhra Pradesh on PPP model (Ongoing activity)  Brief Strategy document for DCs and GLs- Country level and State level (for India)  Already prepared 2-pagers Strategy briefs for Bangladesh, Myanmar, Nepal and, Indian states of Rajasthan, Andhra Pradesh  detailed strategic action plans will be prepared, subject to requests from states/countries/ donors.  Integrated value chain analysis and PPP options  ICT-based market development strategy like e-market in India under PPP framework  Risk mitigation framework & strategy for smallholders  Identifying policy gaps and developing new focus area- Framework and guidelines
  17. Thank you! ICRISAT is a member of the CGIAR Consortium
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